WSJ's Jess Bravin examines the topics surrounding the health care law final day of arguments before the Supreme Court, including whether components of the law can stand if the individual mandate is struck down. Photo: KAREN BLEIER/AFP/Getty Images

The court's liberal and conservative wings seemed inclined to split evenly over the question of whether the "individual mandate" requiring Americans to carry health insurance or pay a fine is constitutional.

Justice Anthony Kennedy—nearly always the court's deciding vote—at times appeared to back the administration's position but also offered one of the toughest tests to the mandate, suggesting the government faced a "heavy burden" on the requirement.

Photos: Day Two of Health-Law Arguments

Supporters and opponents of the health-care law rallied outside the Supreme Court in Washington Tuesday. Brendan Smialowski/AFP/Getty Images

Transcript, Audio From Tuesday's Arguments

See the full transcript, read highlighted commentary and listen to select audio.

A large crowd of people protesting, and supporting, the health care overhaul descended Monday on the Supreme Court, which is deciding whether the law is constitutional. WSJ's Neil Hickey reports the people had a variety of reasons for being there.

ENLARGE

People holding tickets for Tuesday's hearing on the health-care law line up to enter the U.S. Supreme Court building.
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Justice Kennedy said the mandate took "a step beyond what our cases have allowed," echoing in his line of questioning the nub of the challengers' argument.

Justice Antonin Scalia posed the challengers' favorite hypothetical when he suggested the government's defense of the law could potentially apply to any product. "Everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market," he said. "Therefore, you can make people buy broccoli."

The solicitor general, Donald Verrilli, seemed ready for the argument, replying that food isn't a market in which a person's participation is unpredictable or involuntary.

The skepticism of Justice Scalia and the other conservative justices brought home the possibility that the insurance mandate could be overturned. If so, that would raise the question of which parts of the law, if any, could remain, a question the court was set to address Wednesday on the final day of arguments.

The court's four liberal justices all seemed friendly toward the law, while two conservative justices—Mr. Scalia and Samuel Alito—left little doubt they would vote against it. Justice Clarence Thomas remained silent, as is his custom, but his prior writings suggest little sympathy for the government's position.

Apart from Justice Kennedy, Chief Justice John Roberts's vote also appeared to be in question.

Rising to open the two-hour hearing, Mr. Verrilli seemed almost overcome by the moment, choking momentarily as he opened his defense of President Barack Obama's key legislative accomplishment.

The stock prices of health insurers fell in the morning as word emerged of Justice Kennedy's skeptical questioning, then recovered somewhat as a fuller picture emerged. Health insurers fear that if the mandate is struck down but the rest of the law survives, they would be forced to accept millions more sick customers without enough new healthy customers to balance out the risk pool.

At the Supreme Court, the courtroom again was packed and demonstrators outside filled the streets. Inside, the justices finally arrived at the centerpiece of the case after two years of legal battles, and they dived head-first into questioning what powers the federal government has, and when do they go too far.

Mr. Verrilli immediately asserted the premise behind the law: that virtually everyone needs health care or eventually will. He said the law doesn't force people to buy something they don't want, but rather governs how they pay for something they inevitably will need.

The government described an existing nationwide market for health services and said almost everyone already is part of it. The challengers, joined by several conservative justices, saw the product in question as health insurance—and said people have a right to stay out of that market if they wish.

"Why do you define the market that broadly?" Justice Scalia asked Mr. Verrilli. "It may well be that everybody needs health care sooner or later, but not everybody needs a heart transplant."

"That's correct, Justice Scalia, but you never know whether you're going to be that person," Mr. Verrilli replied, saying that is why the American health-care system is largely financed through insurance.

The challengers conceded that the government could do many things to regulate the health-care market, including requiring individuals to pay for medical services with insurance or creating a system in which the government pays for everyone's care.

The law aims "to get care for the ones who need it by having everyone in the pool, but is also trying to preserve a role for the private sector, for the private insurers," said Justice Ruth Bader Ginsburg. "There's something very odd about that, that the government can take over the whole thing and we all say, 'Oh, yes, that's fine,' but if the government wants to preserve private insurers, it can't do that."

Paul Clement, an attorney representing 26 Republican-led states challenging the law, said Congress had options beyond a "government takeover." He said the government could simply use its taxing and spending power to give insurers a subsidy that would enable them to offer coverage to all comers.

Alternatively, he said, Congress could require people to purchase insurance immediately before actually obtaining medical care.

"That would be regulating at the point of purchase," when individuals would be voluntarily entering the health-care market, Mr. Clement said.

"It seems as though you are just talking about a matter of timing—that Congress can regulate the transaction, and the question is when does it make best sense to regulate that transaction," said Justice Elena Kagan. Why, she wondered, would the Constitution permit Congress to make people buy insurance at the worst time, such as after they have arrived at the emergency room, yet prohibit the policy of requiring its purchase in advance of catastrophe.

Justice Kennedy, and to an extent Chief Justice Roberts, seemed to take that position seriously.

Uninsured people, Justice Kennedy said, "are in the market in the sense that they are creating a risk that the market must account for."

Mr. Clement said that was true with any industry. "When I'm sitting in my house deciding I'm not going to buy a car, I am causing the labor market in Detroit to go south," he said. But he said that shouldn't entitle the government to force him to buy a car.

Michael Carvin, an attorney representing private plaintiffs including the National Federation of Independent Business, rejected the government's premise that 40 million uninsured Americans are distorting the health-care market by shifting costs of free emergency-room care to taxpayers and insurance ratepayers.

"I agree that that's what's happening here," he said. While the government asserts the insurance market is unique, "in the next case, it'll say the next market is unique," he said, cheering the challengers.

But Justice Kennedy went on to suggest that "most questions in life are matters of degree." And in a comment that pleased the health law's backers, he said uninsured young people are "very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries."

The Supreme Court scheduled three days of arguments on the law. During initial arguments Monday, the justices sent clear signals that they believe they can rule on the health-care overhaul now, casting aside a possible procedural hurdle.

Corrections & Amplifications Justice Anthony Kennedy said the Obama administration faces a "heavy burden" to justify its health-care law. An earlier version of this article incorrectly quoted Justice Kennedy as saying it faces a "very heavy burden."

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